Urban Outfitters (URBN) to Report Q3 Earnings: What to Expect
Urban Outfitters, Inc. URBN is likely to report top and bottom-line numbers when it releases third-quarter fiscal 2024 results on Nov 21, after market close. The top-line estimate for the quarter is currently $1,261 million, indicating a 7.3% rise from the prior-year period’s level.
The Zacks Consensus Estimate for earnings is pinned at 81 cents per share, indicating growth of more than 100% from earnings of 40 cents a share recorded in the prior-year period. The consensus mark has increased a penny over the past seven days.
The company delivered an average earnings surprise of 19.2% in the trailing four quarters.
Factors to Note
Urban Outfitters’ fiscal third-quarter performance is likely to have benefited from its strategic efforts, including technological advancements, store rationalization and merchandising initiatives. The company has been strengthening its direct-to-consumer business, enhancing productivity in the existing channels, expanding product assortment and optimizing inventory level. URBN has also been strengthening its presence with the rapid expansion of digital activities. Its FP Movement initiative to boost growth at the Free People brand is also promising. The company’s Nuuly, the subscription-based rental service, has also been contributing.
All these factors are expected to have favored Urban Outfitters’ to-be-reported quarterly results. On its last earnings call, management cited that it is impressed with the sturdy overall consumer demand at the start of the fiscal third quarter and projected total company sales to grow in the high-single digits. This growth will be backed by a mid-single-digit increase in the Retail segment comp sales and a high double-digit rise in the Nuuly segment’s sales. It anticipates the gross margin for the quarter to improve more than 400 basis points year over year backed by increased initial product margins from reduced inbound freight costs and merchandise markdowns. We foresee an increase of 410 basis points in the adjusted gross margin and an expansion of 280 basis points in the operating margin.
The company further highlighted that the Free People Group's Retail segment performance will be positive in the impending quarter. It expects the Anthropologie brand to deliver strong comps in the third quarter. Management has forecast the Free People brand’s Retail segment performance to be positive for the fiscal third quarter. Our model suggests a net sales increase of 10.1% and 18.8% in the Anthropologie Group and Free People brands, respectively, for the third quarter.
On the flip side, a tough operating backdrop, including inflationary pressures and currency headwinds, is likely to have acted as a deterrent. Urban Outfitters has also been grappling with higher selling, general & administrative (SG&A) expenses and lower sales across its wholesale unit for a while now. We note that the company’s overall sales in the fiscal third quarter are likely to be partly offset by a decline in sales at the Wholesale unit. We expect the wholesale segment to witness a fall of 2.5% year over year in the quarter under review. We anticipate SG&A costs to rise 12.9% and as a rate of sales, the metric will increase 140 basis points during the quarter under discussion.
What the Zacks Model Unveils
Our proven model doesn’t conclusively predict an earnings beat for Urban Outfitters this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here, as you can see below. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Urban Outfitters, Inc. Price and EPS Surprise
Urban Outfitters, Inc. price-eps-surprise | Urban Outfitters, Inc. Quote
Urban Outfitters currently has an Earnings ESP of -1.69% and a Zacks Rank of 3.
Stocks Poised to Beat Earnings Estimates
Here are a few companies, which according to our model, have the right combination of elements to come up with an earnings beat this reporting cycle:
Build-A-Bear Workshop BBW currently has an Earnings ESP of +0.66% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for third-quarter fiscal 2023 earnings per share is pegged at 51 cents, flat year over year.
Build-A-Bear Workshop’s top line is expected to increase year over year. The consensus estimate for quarterly revenues is pegged at $107.6 million, which indicates an increase of 3% from the figure reported in the prior-year quarter. BBW has a trailing four-quarter earnings surprise of 21.6%, on average.
Costco COST currently has an Earnings ESP of +4.26% and a Zacks Rank of 2. COST is likely to register a bottom-line increase when it reports first-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for quarterly earnings per share of $3.43 suggests an increase of 10.7% from the year-ago fiscal quarter’s reported number.
Costco’s top line is expected to improve from the prior-year fiscal quarter’s reported number. The consensus estimate for quarterly revenues is pegged at $57.7 billion, suggesting growth of 6% from the prior-year fiscal quarter’s reported figure. COST has a trailing four-quarter earnings surprise of 2.1%, on average.
NIKE NKE currently has an Earnings ESP of +0.45% and a Zacks Rank of 3. The company is likely to register top and bottom-line growth when it reports second-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for NKE’s quarterly earnings per share of 85 cents remains flat year over year.
NIKE has a trailing four-quarter earnings surprise of 27.1%, on average. The consensus estimate for NKE’s quarterly revenues is pegged at $13.4 billion, indicating a rise of 0.7% from the figure reported in the prior-year quarter.
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